Camptown has been closed since 2000. Ruffin had proposed a $25 million-plus upgrade and expansion to the track to become a so-called "racino," with 600 electronic games, a Gilley's Bar and Grill, and other food and drink offerings.

A law enacted last year allows four state-owned casinos and slots at Camptown and at the Woodlands dog and horse racing park in Kansas City, Kan. The Lottery is in the process of negotiating contracts with a dozen applicants to run the state-owned casinos.

The law requires that 40 percent of revenues from the electronic games at the tracks go to the state. Two percent would go to Crawford County and 1 percent to neighboring Cherokee County.

Lunsford said Ruffin Cos. had problems with the way the expanded gambling law was structured. She said the company suggested making changes to the law to make the track a better investment. "However, it's not the place of the Lottery to make changes to statutes," she added.

Crawford County Commissioner Ralph McGeorge, of Pittsburg, said the commission thought the race track would provide economic benefits.

"Boy, it's kind of like getting hit in the chin," McGeorge said.

"We were hoping for the best, that this situation could change and help us out in Crawford County," he said.

Sen. Jim Barone, a Frontenac Democrat, said he was surprised by the news.

"It's very unfortunate, because Mr. Ruffin had assured me personally early on that he would open the dog track in Frontenac, even when I said there could be a substantial risk," Barone said.

Barone said he hopes that someone else can be found to operate the track. He said the Kansas Racing and Gaming Commission should require Ruffin to surrender the license it issued to him in August 2007.